"Finance World" International Monetary Fund lowered India’s Growth Projection for 2012 to 6.9 Per Cent

The International Monetary Fund (IMF) on 27 April 2012 lowered India’s growth projection to 6.9 per cent for 2012. The multilateral agency in January projected Indian economy to grow to by 7 per cent for 2012. The slashed growth projection is broadly attributed to the country’s poor performance on the front of economic reforms and slowing investment. The IMF, however, maintained India’s growth estimate for 2013 at 7.3 per cent. As per the IMF, the national economy grew by 7.1 per cent last year.


 The IMF’s growth projection is an indication for the government to expedite the process of economic reforms which has long been victim of the country’s internal political clutter. Many of the important reforms are still in the pipeline which needed to be approved as soon as possible.


Government should make sure that it is taking adequate majors to boost up the sentiment of investors, who are increasingly getting disenchanted of the future prospects of Indian Economy.

"Finance world" Retrospective amendment to fetch Rs 35,000-40,000 crore

According to estimates, the proposed retrospective amendment would result in an additional tax income for the government of between Rs 35,000 and 40,000 crore.

 Minister of state for finance S S Palanimanickam said that the income tax department have estimated the total tax implication of the proposed amemdment would be about Rs 40,000 crore. He was speaking to the Rajya Sabha members on Tuesday when he announced the massive figure.

 "The total tax implication in consequence of retrospective amendments introduced in the Finance Bill may be to the tune of Rs 35,000-40,000 crore", Palanimanickam said in a reply.

 Finance Minister Pranab Mukherjee is backing the proposed changes to the Income Tax Act with retrospective effect, which could once again open the Vodafone tax case making company liable to pay about Rs 11,000 crore as tax for an acquisition deal.

 Global business chambers including Confederation of British Industry, U. S. Council for International Business and Japan Foreign Trade Council have written a letter to the Indian PM with their concerns over the proposed changes to the law.

 Vodafone Group is planning its move over the tax claims as the government moves to change laws that will make the company liable to pay more than $2 billion in taxes.

"Finance World" RBI asks states with weaker finances to raise cheaper funds

India’s central bank the Reserve Bank of India (RBI) has said the state governments with weaker financial position are able to borrow from the market due to the market perception that these borrowings are backed by the sovereign.

 Deputy Governor Subir Gokarn of the RBI said that there is a need to bring formal institutional fiscal discipline in the country to address the problem.”State government debt is apparently implicitly guaranteed by the sovereign. So, with or without a formal guarantee the market perceives that state debt has been fully backed,” said Gokarn.

 He pointed out that the states with a weaker financial position are not able to pay as much premium as compared to the states with higher premium. He was speaking at the 14th Annual Money and Finance Conference organised by the Indira Gandhi Institute of Development Research.

 He said that after clarity on separation and a no-bailout rule, the market will automatically start exerting pressure on the state governments to set their finances right in order or pay more to borrow. He added that this pressure acts as a discipline enforcer for the states.
Source:topnews..in

"Finance World" How India can beat the oil crisis

India's crude oil production rose barely 1% in 2011-12 over the previous year to 7,63,000 barrels per day. Meanwhile, India's energy needs are exploding. The mismatch between domestic crude production and imports has had three disastrous consequences.

 One, our import bill for 2011-12 has shot up to $475 billion. Of this, nearly a third, or $150 billion, comprises crude oil imports. Two, the trade deficit has bloated to $175 billion. Oil imports now comprise a gargantuan 85% of the country's total trade deficit.

 Three, for the first time since the Lehman crisis in September 2008, India's balance of payments in 2011-12 has turned negative. This is despite robust FII inflows: a record $9.50 billion-plus in the January-March 2012 quarter, the highest since 1993 when FIIs were allowed to invest in the Indian stock market.

 The minister for petroleum and natural gas, S Jaipal Reddy, who took charge in January 2011, has a lot of policy debris of the past to clear up. India's domestic oil production slowed on the watch of Murli Deora who held the portfolio between 2006 and 2011. Reddy has begun shaking up the old order. Domestic crude production is slated to rise by 11% in 2012-13 and a further 8% in 2013-14 to reach just under one million barrels per day (bbd).

 India's total crude oil requirement in 2013-14 is expected to rise to well over four million bbd. Crude imports, however, should fall from the current level of 80% of total consumption to 75% if new oilfields prospected by Cairn and ONGC deliver on their promise by 2014.

 The long-term target must be to bring the ratio of imported crude to total consumption down to the historical level, last seen in the 1980s and early-1990s, of around 65%.

 This requires three policy changes. First, reduce bureaucratic delays. Cairn, for example, has been waiting for nearly two years to ramp up production in its Mangala oilfield. Second, encourage more joint ventures in exploring foreign oil and gasfields. ONGC Videsh's Russian investments in Sakhalin-I and Videocon's fields in Mozambique, Brazil, East Timor and Australia should encourage Reliance Industries (RIL), Essar, Adani and other private sector exploration companies to expand their global footprint.

 Third, pursue the new shale gas strategy that the Prime Minister outlined last month. By end-2013, shale gas exploration bids in six Indian regions (Cambay, Assam-Arakan, Gondawana, KG onshore, Cauvery onshore and Indo-Gangetic basins) could reveal long-term potential.

 Despite environmental concerns over deep-rock fracking and the cost of technology, shale gas is already boosting America's domestic energy production and reducing its historical reliance on oil imports.

 RIL's discoveries in the Krishna Godavari (KG) basin at the turn of the century promised much but that promise, a decade later, remains unfulfilled. Natural gas production from the KG-D6 fieldwas estimated to yield 80 million standard cu m per day (mmscmd). It is currentlyproducing less than 28 mmscmd, causing a huge crisis for sponge iron plants across the country. Also hit are power projects whose gas-fired plants are working at less than 50% capacity.

 The government is locked in a dispute with RIL over a host of issues relating to gas pricing and approval of new investment in infrastructure to drill more wells in the contiguity of KG-D6. RIL last month finally secured government approval to explore four satellite fields in KG-D6 at an investment of $1.53 billion. This could provide an additional 10 mmscmd of natural gas. British Petroleum ( BP), which last year invested $7.2 billion to acquire a 30% stake from RIL in 21 oil and gas blocks, has best-in-class expertise in new deep-sea drilling technology.

 This will play an increasingly-important role in KG-D6's future development. It is significant, however, that BP's statutory filings in London indicate that proven reserves in the KG-D6 field are 1.4 trillion cu ft - a mere tenth of RIL's own estimates.

 The issue though is bigger than one or two private companies. India's oil and gas exploration policy has been caught in red tape for over a decade. With Reddy at the helm of the petroleum and natural gas ministry, will things really change? The minister must set ambitious targets. Indian crude oil demand, despite the growth of renewable and alternative energy sources, will rise at least 60% from the current 3.7 million bbd to around six million bbd in 2021-22.

 Assuming domestic crude production doubles in the eight years between 2013-14 and 2021-22 to two million bbd at a CAGR of 9%, India will still need to import four million bbd. However, the dependence on foreign crude would fall from 80% currently to around 67% - a realistic target that will constitute a significant advance in combating our long-term trade and current account deficits.

 If the price of crude roughly doubles in a decade to around $230 per barrel, a reasonable estimate based on both economic and geopolitical factors, the annual cost of India's targeted crude oil imports of four million bbd would rise from $150 billion today to $335 billion in 2021-22. Indian exports, currently $300 billion, are expected to grow at a CAGR of 12-15% a year. Taking the lower growth figure in that range (12%), our exports should be $800 billion by 2021-22, bringing the oil import-to-total exports ratio ($335 billion/$800 billion) down from today's inflationary level of over 50% to a more sustainable 41%. The positive spin-offs on the rest of India's economy will be significant.
Source:The Economic Times

"Finance World" FM asks IRDA to address ‘suicidal competition' among insurers

India union Finance Minister Pranab Mukherjee has asked the Insurance Regulatory and Development Authority (IRDA) to address the problem of ‘suicidal competition' among insurers as they increasingly offer policies on lower premium eyeing a bigger market share and suffer on financial position.

  Mr. Mukherjee said: “To ensure prudent underwriting and curbing unhealthy and suicidal competition among the companies through undercutting premiums is something that the regulator will need to address suitably.”

 The finance minister was speaking at the 72nd meeting of the IRDA board. He said that there is unhealthy competition between the insurance companies in the industry for grabbing bigger market share. He said this cut throat competition is already beginning to affect the balance sheets of the companies in the industry.

 He said that as the insurance companies are now free to fix premiums for their policies, the companies have significantly lowered the premiums and this is affecting their financial position.

 Mr, Mukherjee observed that despite the competition for a bigger market share the penetration level of insurance in the country remains low. He said India is an underinsured market with financial vulnerability among most income groups.

"Finance World" RBI tightens reporting norms to monitor gold import

The Reserve Bank of India on 3 April 2012 tightened the reporting requirements of the banks. As per the directions issued, banks will have to submit a monthly statement informing the central bank about the quantity of gold imported and mode of payment adopted. The statement is to be filed with the foreign exchange department of the RBI and has to be submitted at the end of March and September.


 The directive was issued amidst concerns of huge outflow of foreign exchange on import of gold which is believed to be putting pressure on the India's current account deficit (CAD).


 Banks were directed to file a half yearly statement on quantity and value of gold imported by nominated banks, agencies, export-oriented units (EOUs) and special economic zone (SEZs) in gem & jewellery sector, as well as mode of payment. Banks were also directed to file monthly statement on the quantity and value of gold imports by the nominated agencies (other than the nominated banks), EOUs, SEZs as well as the cumulative position at the end of the reporting month.


 Earlier, banks were only required to submit a monthly statement on the number of transactions and value of gold imported by EOUs, units in SEZ\export processing zone and nominated agencies/banks.


 As per the World Gold Council, the total gold imported in India in 2011 was 969 tonnes. India is the world's largest importer and consumer of the precious metal. India's gold import bill was USD 46 billion in April- November 2011, next only to USD 71-72 billion of crude oil. Hence to discourage gold imports, the government doubled the customs duty on it to four percent.
 Source:jagran josh

"Finance World" SEBI decided to Enforce Broad Guidelines for Algorithmic Trading in the Securities Market

The Securities and Exchange Board of India (SEBI) on 31 March 2012 issued broad guidelines on Algorithmic Trading. Based on recommendations of technical advisory committee (TAC) and secondary market advisory committee (SMAC), SEBI decided to enforce broad guidelines for algorithmic trading in the securities market.


 The market regulator directed stock exchanges to undertake system upgradation, including periodic upgradation of its surveillance system so as to keep pace with the speed of trade and volume of data that may arise through algorithmic trading. Also, the stock exchanges were asked to put in place monitoring systems to identify and initiate measures to impede any possible instances of order flooding through this system.


 It is for the stock exchanges to ensure that all algorithmic orders are necessarily routed through broker servers located in India. The stock exchange has appropriate risk controls mechanism to address the risk emanating from algorithmic orders and trades.


 SEBI highlighted that the minimum order-level risk controls include: • Price check - the price quoted by the order is not to violate the price bands defined by the exchange for the security. • Quantity limit check — the quantity quoted in the order shall not violate the maximum permissible quantity per order as defined by the exchange for the security.

 Stock exchanges are to seek details of strategies used by algo traders for inquiry, surveillance, investigation and the like. The stock exchange is to also include a report on algorithmic trading on the stock exchange in the monthly development report.


 SEBI further mentioned that stock exchanges shall subject the systems of the stock broker to initial conformance tests to ensure that the checks mentioned are in place and that the stock broker’s system facilitate orderly trading and integrity of the securities market.
Source:jagran josh

"Sunday Special" Government’s Fiscal Deficit in the April-February Period of 2011-12 stood at Rs 4.93 lakh crore

As per the Controller General of Accounts’ (CGA) data released on 30 March 2012, union government’s fiscal deficit during the April-February period of 2011-12 stood at Rs 4.93 lakh crore, or 95% of the revised estimates. At the end of the 11 months ending February, the fiscal deficit was Rs 493571 crore or 94.6% of the target.

During the April-February period of 2010-11, the deficit had stood at 68.6% of the budgeted target. The government in March revised upwards the fiscal deficit target for the 2011-12 fiscal to 5.9% of GDP, from 4.6% projected earlier.


 Rise in fiscal deficit was attributed to high subsidy bill, increasing crude oil prices, low tax collection and poor realisation from sale of government equity in state-owned companies. in the nine months to December 2011, the cover that the foreign exchange reserves provided to the total external debt came down to less than 89%. In this period external debt to GDP ratio increased to 20% vis-à-vis 17.8% at March-end 2011.


India’s total external debt at the end of December 2011 was $335 billion, an increase of $29 billion over $306 billion at March-end 2011. Higher commercial borrowings and short-term trade credit were held responsible for the raise. The share of dollar denominated debt at 57% was the highest in external debt, followed by the rupee 18.6%, Japanese yen 10%, SDR 9% and euro 4%.


 The long-term debt was $257 billion, recording an increase of $15.8 billion over the March-end 2011 level, while short-term debt increased by $13 billion to $ 78 billion. Short-term debt accounted for 23% of India’s total external debt. Long-term debt accounted 77%. In terms of component the share of commercial borrowings stood highest at 30%, followed by NRI deposits 16% and multilateral debt 15%.
Source:jagran josh

"Saturday Special"P-notes to have no tax liability in India, says FM

India's union finance minister Pranab Mukherjee said on Friday that the investors holding participatory notes, or P-notes would not have any tax liability in the country.

He pointed out that the tax authorities in the country would determine the tax that the financial institutional investors (FIIs) are liable to pay in the country. They will not find out any additional information about the holders of participatory notes. Thus there will be no tax liability for such holders under the Indian laws.

Mukherjee has proposed the GAAR as part of the union budget presented on March 16 for the year starting on April 1, 2012. The GAAR is aimed at avoid the aggressive tax avoidance schemes that exploit the liberal tax laws in investments between countries like India and Mauritius.

He explicitly said that GAAR will not hurt honest taxpayers in the country and the government will not punish genuine foreign investors who invest in domestic shares through participatory notes.

Foreign portfolio investors that are registered with the Indian market regulator issue p-notes. They can also be issued by their sub-accounts for foreign investors, who often invest in thescheme anonymously. These p-notes often avoid paying taxes in India but the introduction of GAAR would impact the investments in the instruments due to introduction of taxes.

The experts had warned that the introducing taxation for Participatory notes would shut down the avenue for investments to flow into the country.
Source:topnews.in

"Finance World" Mallya might sell stake in UB to Heineken

Indianbillionairebusinessman, Vijay Mallya might be planning to cell part of his stake in United Breweries, the flagship business unit of the UB group, to Dutch brewery giant Heineken in order to raise money to help the troubled Kingfisher Airlines.

According to a media report citing people closer to the matter, Mallya might sell 13 per cent of United Breweries, which is worth about $370 million, to Heineken. The stake could pass the ownership of United Breweries to Heineken as it already owns 37.38 per cent in the country's largest beverages group.

Mallya has a 19 per cent in United Breweries and might be planning to sell some of the stake to infuse capital in the troubled Kingfisher Airlines. According to estimates, Kingfisher has a total debt of about Rs 7,000 crore and accumulated losses of about Rs 6,000 crores.

The country's civil aviation ministry has said that it will determine its actions on whether to allow the airline to continue on the basis of a performance report released by DGCA. The DGCA is likely to call Vijay Mallya to know what are his plans for the troubled airline. The airline will be allowed to operate as long as it is able to keep its passengers safe and followschedule.

Both UB Group and Heineken did not comment on the matter.

Source:topnews.in

"Finance World" Gayatri Projects raises Rs 144 crore via rights issue

Gayatri Projects , a construction and infrastructure company, has raised Rs 144 crore through a rights issue of shares at Rs 120 each.

After the rights issue, the founder's stake in the company rose to 63.47% from 55%, the company said.


Source:moneycontrol

"Finance World" Vijay Mallya may sell between 12-13% stake in UBL

Liquor baron and chairman of UB Group Vijay Mallya could be looking to offload 12-13% of his stake inUnited Breweries (UBL). Sources say Mallya and Heineken are in final stages of negotiations.

Heineken may look to acquire controlling stake. The deal could be valued around Rs 1,700 crores

Mallya and Heineken could be working on an agreement on UBL stake sale. An announcement is expected shortly.

Currently, Heineken holds 37.5% stake in UBL and Mallya holds 23% stake in personal capacity. United Spirits Ltd (USL) and UB Holdings together own 14.71% stake in UBL. The balance is with the public.

Mallya stake sale will allow Heineken stake to go beyond 50%. Mallya will garner between USD 400-500 million, Rs 2,500 crore for 12-13% stake. The transaction will give control premium of Rs 800 crore to Mallya.

Meanwhile, sources indicated that USL and UB Holdings are unlikely to sell their stake.

When contacted, UB Group and Heineken refused to comment, saying they do not talk publicly about rumour and speculation.

Source:money control

"Financial World" Key points of RBI's new guidelines for gold loan NBFCs

The Reserve Bank of India issued new fair practice guidelines for the MFI and gold loan NBFCs (Non-banking finance companies) under which these companies will have to ensure that adequate due diligence is carried out On customers.

According to the new rules, prior notice has to sent out to gold loan borrowers if non-payment of loans compel NBFCs to auction jewellery kept as collateral. The NBFCs will have to announce the auction via advertisement placed on at least two newspapers and they cannot particpate in such auctions.

In addition, pledged gold will have to be auctioned only via board-approved auctioneers and the loan agreement shall also disclose auction procedure details.

The guidelines further states that jewellery taken as collateral needs to be appropriately insured and the NBFCs must ensure an adequate system for storing them in safe custody.

Below are the key points of the guidelines

• Code in vernacular language to be displayed by an NBFC-MFI in its office and branch premises
• Field staff to make necessary enquiries with regard to existing debt of the borrowers
• Effective rate of interest charged, grievance redressal system should be prominently displayed
• Due diligence shall be carried out to ensure the repayment capacity of the borrowers
• All sanctioning and disbursement of loans should be done only at a central location
• More than one individual should be involved
• Loan agreement be detailed and contain all necessary conditions
• The borrower cannot be a member of more than one SHG / JLG
• Non-coercive methods of recovery
• Field staff shall be allowed to make recovery at residence only if borrower fails to appear at central designated place on 2 or more occasion.

Source:moneycontrol

" Saturday Special"RBI to compensate banks

India's central bank, the Reserve Bank of India has said that it will compensate 100 per cent revenue loss to banks for five years to encourage financial inclusion in the North-East region in the country.

 RBI Deputy General Manger T Jamang said that under the plans, a banking facility should be available in each village or cluster of nearby villages that has a population of 2,000 by March 2012.

 "RBI will compensate 100 per cent revenue loss to banks for five years as an incentive to push financial inclusion in the region," Jamang said. He was speaking on the sidelines of an annual payment conference of the central bank. Jamang also said that the compensation will also be extended to specific areas in which the population is more than 1,000 and more.

He also said that the central bank is aiming at including people in the banking system by connecting villages with a banking correspondent and mobile individuals. RBI is also working to improve e-banking penetration in the region in order to allow easy access to banking services to the people.

The central bank wants to offer mobile-banking facilities so that baking facilities can be accessed on mobile devices instead of banks.
Source:topnews.in

"Financial world"Post Budget Analysis by Kotak Securities

This Union Budget drafted by Finance Minister Pranab Mukherjee is India’s 81st budget and was present amidst loads of anticipation. The Sr. Vice President from the Research team at Kotak Securities Mr. Dipen Shah shares his opinions and analyzes the budget accurately from his perspective. With the fiscal deficit to be targeted at 5.1% of GDP, the budget commenced with a pragmatic approach. The excise duty mounted by 2% just as it was prophesied by him.

Further, it requires serious follow–up and loads of investigation to attain this Fiscal Deficit number though. With the shrinking of subsidy rates at present and further cutting it down, the burden might ease to a small extent at least. The present scenario can be fixed with the introduction of administrative and procedural reforms. According to him, it may also benefit the private sector with the operating environment turning out to be more productive.


 He also states that it is with the implementation of all these initiatives that the private sectors may gain hope and switch to investing. The hike in import duty of gold may enable the Government to restrain the current account deficit. The pin down in the current account deficit will enable us to resolve the present financial problems that the country is undergoing. Also this additional revenue created may slacken off the pressure on Indian rupee.

 The reforms introduced surely present an optimistic view with the budget supporting growth and development. The initiatives catering to consumption related activities along with intensifying the public sector investments. Also, the private sectors are expected to benefit from the administrative reforms that will phase in over due course of time.

 Though the STT (Securities Transaction Rate) has reduced below the expected lines i. e. a 20% cut, it may surely lessen the transaction cost marginally. The Budget announced that the Rajiv Gandhi Equity Saving Scheme (RGESS) may permit 50% tax deduction for the first time investors. However, the implementation of this scheme will need clarification regarding its functioning.

 With the market expected to remain range – bound, it would be recommended that one opts for a bottom-up approach at this period of time.

 About Kotak Securities: - Kotak Securities is one of India's leading stock broking firms offering stock trading, mutual fund and IPO investing service's along with a research division specializing in Sectoral research and Company Specific Equity Research

source:topnews.in

"Finance world"Retail inflation increases to 8.83% in February

India’s retail inflation was recorded at the level of 8.83 per cent in the month of February 2012 compared to 7.65 per cent recorded in January.

The increase in retail inflation, which is based on the Consumer Price Index, comes mainly due to increase in prices of protein based items and edible oil in the country. The prices of eggs, meat and fish increased 10.62 per cent over the previous year while milk and mil products become dearer by 15.76 per cent compared to February of 2012. The cereals and products category reported an increase of 2.40 percent February while pulses and products prices rose 4.17 per cent. Prices in the oil and fat category increased 12.76 per cent and spices became costly by 8.68 per cent. The inflation rates for rural and urban areas were 8.36 per cent and 9.45 per cent in February compared to a revised estimate for January of 7.28 per cent for urban and 8.25 per cent for rural. Meanwhile, the benchmark wholesale-price index was recorded at 6.95 per cent in February compared to a year earlier, according to a statement from the union commerce ministry. The inflation as recorded at 9.54 per cent in February 2011. Food inflation was 6.07 per cent in February compared to 0.52 per cent in January. Source:topnews.in

finance world:Future Group to become debt-free by March 2013

Retailing giant, Future Group is aiming to reduce its debt and become a completely debt-free company by March 2013, according to Chairman Kishore Biyani.

The group is planning to sell brands and units in order to raise funds to reduce its debt level that amounts to about $ 1.6 billion. It is aiming to raise between Rs 25 billion to 30 billion through sale of stake in Future Value Retail to a strategic investor. Future Value Retail owns Big Bazaar hypermarkets and Food Bazaar supermarkets in the country. According to a report, the company might be planning to merge its electronics retail chain eZone with another services company. It might also be looking at inviting financial and strategic partners for its furniture retail, HomeTown to reduce the debt of the parent company, Pantaloon, by around Rs. 6 billion to 7 billion. Pantaloon Retail has a debt of about Rs. 25 billion. Another group unit, Future Logistics is planning to raise Rs 8 billion to 10 billion from private equity investors while Future Ventures might sell some of its holdings in various brands. source:topnews.in

Finance Minister raises duty on gold imports to 4 per cent

India union Finance Minister Pranab Mukherjee has announced his decision to increase the duty on gold imports to 4 per cent in the country with effect from the next financial year. The doubles of he duty from 2 per cent comes after previous increase in January. The move indicates that government is increasing concerned over the import of the metal that worsens its current account. Mukherjee said that the growth of 50 per cent in import of gold and other metals has become the primary reason for the worsening of the current account position of the government during the first three quarters of this year. He pointed out that he as to take steps to work on the steps that are already taken to control the situation. India, which is the largest consumer of the shiny metal, is estimated to import a record $58 billion worth of gold in the 2011-12 fiscal year, according to the Prime Minister's Economic Advisory Council The government has said in January that it will levy customs duty at the rate of 2% on the value instead of a flat rate of Rs. 300 per 10 gram for gold. On the other hand, Silver began attracting a 6% duty, instead of a specific duty of Rs. 1,500 a kg earlier. The changes in import duty norms resulted in customs duty of Rs. 550 per 10 gram for gold and Rs 3,163 for silver. The duties on the metals will increase if their prices rise in the international markets as the duties are linked to their value. Prithviraj Kothari, the President of the Bombay Bullion Association warned that the gold import into the country will fall by 50 per cent in the next six months and this could open illegal channels for importing the metal into the country.

Union Budget 2012-13: A summary

The Union Budget 2012-13 presented by the Finance Minister Pranab Mukherjee in Lok Sabha.

They include focus on domestic demand driven growth recovery; create conditions for rapid revival of high growth in private investment; address supply bottlenecks in agriculture, energy and transport sectors particularly in coal, power, national highways, railways and civil aviation; intervene decisively to address the problem of malnutrition especially in the 200 high-burden districts and expedite coordinated implementation of decisions being taken to improve delivery systems , governance, and transparency; and address the problem of black money and corruption in public life. Mukherjee said that India's GDP growth in 2012-13 is expected to be 7.6 per cent +/-0.25 per cent. He said that in 2011-12, India's GDP is estimated to grow at 6.9 per cent after having grown at the rate of 8.4 per cent in each of the two preceding years He said though the global crisis had affected India, it still remains among the front runners in economic growth. Mukherjee said the slowdown is primarily due to deceleration in industrial growth. Stating that the headline inflation remained high for most part of the year, the Finance Minister expressed hope that it will moderate further in the next few months and remain stable thereafter. FM laid emphasis on striking a balance between fiscal consolidation and strengthening macroeconomic fundamentals. He announced introduction of amendments to the Fiscal Responsibility and Budget Management Act, 2003 (FRBM Act) as part of the Finance Bill 2012. He said that concept of "Effective Revenue Deficit" and "Medium Term Expenditure Framework" statement are two important features of Amendment to FRBM Act in the direction of expenditure reforms. This statement shall set forth a three year rolling targets for expenditure indicatoRs The Finance Minister called for a need to have a close look at the growth of revenue expenditure, particularly, on subsidies. He announced that from 2012-13 while subsidies related to food and for administering the Food Security Act will be fully provided for, all other subsidies would be funded to the extent that they can be borne by the economy without any adverse implications. He said that the Government will endeavor to restrict the expenditure on central subsidies under 2 per cent of GDP in 2012-13and over the next three years, it would be further brought down to 1.75 per cent of GDP. Finance Minister said that based on recommendations of the Task Force headed by Nandan Nilekani, a mobile-based Fertilizer Management System has been designed to provide end-to-end information on movement of fertilizers and subsidies which will be rolled out nation-wide during 2012. He said that transfer of subsidy to the retailer and eventually to the farmers will be implemented in subsequent phases which will benefit 12 crore farmer families. On the tax reforms, the Finance Minister said that the Direct Taxes Code (DTC) Bill will be enacted at the earliest after expeditious examination of the report of the Parliamentary Standing Committee. He said drafting of model legislation for Centre and State Goods and Services Tax (GST) in concert with States is under progress. He added that the GST network will be set up as a National Information Utility and will become operational by August 2012. On the disinvestment policy, Mukherjee said that the Central Public Sector Enterprises (CPSEs) are being given a level playing field vis-à-vis private sector with regard to practices like buy-backs and listing at stock exchange. Stating that while in 2011-12, the Government will raise about Rs 14,000crore from disinvestment as against a target of Rs 40,000 crore, the Finance Minister proposed to raise Rs 30,000 crore through disinvestment in 2012-13. He said at least 51 per cent ownership and management of CPSEs will remain with the government. Calling for strengthening investment environment, Mukherjee said that efforts are on to arrive at a broad-based consensus in respect of decision to allow FDI in multi-brand retail up to 51 per cent. He proposed to introduce a new scheme called Rajiv Gandhi Equity Savings Scheme to allow for income tax deduction of 50 per cent to new retail investors who invest up to Rs 50,000 directly in equities and whose annual income is below Rs 10 lakh. The scheme will have a lock-in period of 3 years Regarding capital markets, the Finance Minister proposed to allow Qualified Foreign Investors (QFIs) to access Indian Corporate Bond market. He also proposed simplifying the process of Initial Public Offer (IPO). Pranab Mukherjee said that the government is committed to protect the financial health of Public Sector Banks and Financial Institutions. He proposed to provide Rs 15,888 crore for capitalization of Public Sector Banks, Regional Rural Banks and other financial institutions including NABARD. He added that a Central Know Your Customer (KYC) depositary will be developed in 2012-13 to avoid multiplicity of registration and data upkeep. The Finance Minister informed that out of 73,000 identified habitations that were to be covered under "Swabhimaan" campaign for providing banking facilities by March 2012, about 70,000 habitations have been covered while the rest are likely to be covered by March 31, 2012.He added that as a next step Ultra Small Branches are being set up at these habitations. In 2012-13, Swabhimaan campaign will be extended to more habitations. Emphasizing on infrastructure and industrial development, Mukherjee said that during the 12th Plan, infrastructure investment will go up to Rs 50 lakh crore with half of this expected from private sector. Stating that in 2011-12 tax free bonds for Rs 30,000 crore were announced for financing infrastructure projects, he proposed to double it to raise Rs 60,000 crore in 2012-13. The Minister proposed to allow External Commercial Borrowings (ECB) to part finance Rupee debt of existing power projects. The Finance Minister announced a target of covering 8,800 km. under NHDP next year and increase in allocation of the Road Transport and Highways Ministry by14 per cent to Rs 25,360 crore in 2012-13. He proposed to permit ECB for working capital requirements of the Airline Industry for a period of one year, subject to a total ceiling of US dollar 1 billion to address the immediate financial concerns of the Civil Aviation Sector.He added that a proposal to allow foreign airlines to participate up to 49 per cent in the equity of an air transport undertaking is under active consideration. Expressing concern over shortage in housing sector, the Finance Minister proposed various measures to address the shortage of housing for low income groups in major cities and towns including ECB for low cost housing projects and setting up of a Credit Guarantee Trust Fund. Regarding textile sector, the Finance Minister announced setting up of two more mega clusters, one to cover Prakasam and Guntur districts in Andhra Pradesh and other for Godda and neighboring districts in Jharkhand in addition to 4 mega handloom clusters already operationalized. He also proposed setting up of three Weavers Service Centres, one each in Mizoram, Nagaland and Jharkhand. The Minister proposed aRs 500 crore pilot scheme in twelfth plan for promotion and application of Geo-textiles in the North East.A powerloom Mega Cluster will be set up in Ichalkaranji in Maharashtra. FM proposed to set up a Rs 5000 crore India Opportunities Venture Fund with SIDBI to enhance availability of equity to micro, small and medium enterprises. Stating that agriculture will continue to be a priority for the government, Mukherjee proposed an increase by 18 per cent to Rs 20,208 crore in the total Plan Outlay for the Department of Agriculture and Cooperation in 2012-13. He said that the outlay for Rashtriya Krishi Vikas Yojana (RKVY) is being increased to Rs 9217 crore in 2012-13. Underlining importance of timely access to affordable credit for farmers, the Finance Minister proposed to raise the target for agricultural credit to Rs 5,75,000 crore, which represents an increase of Rs 1,00,000 crore over the target for the current year. He said that a short term RRB Credit Refinance Fund is being set up to enhance the capacity of Regional Rural Banks to disburse short term crop loans to the small and marginal farmeRs He added that Kisan Credit Card Scheme will be modified to make it a smart card which can be used at ATMs. The Financed Minister said that in order to have a better out reach of the food processing sector, a new centrally sponsored scheme titled National Mission on Food Processing will be started in cooperation with the States in 2012-13. Minister proposed an increase of 18 per cent to Rs 37,113crore for Scheduled Castes Sub Plan and an increase of 17.6 per cent to Rs 21,710 crore for Tribal Sub Plan during 2012-13. Regarding food security, Mukherjee said that National Food Security Bill 2011 is before Parliamentary Standing Committee. He said a multi-sectoral programme to address maternal and child malnutrition in selected 200 high burdened districts is being rolled out during 2012-13. He further said that an allocation of Rs 15,850 crore has been made for ICDS scheme which is an increase of 58% and Rs 11,937 crore for National Programme of Mid-Day Meals in schools for the year 2012-13. He added that an allocation of Rs 750 crore is proposed for Rajiv Gandhi Scheme for Empowerment of Adolescent Girls, SABLA. The allocation for rural drinking water and sanitation is proposed to be increased by over 27 per cent to Rs 14,000 crore and for Pradhan Mantri Road SadakYojana by 20 per cent to Rs 24,000 crore in 2012-13. He proposed to enhance the allocation under Rural Infrastructure Development Fund to Rs 20,000 crore with Rs 5,000 crore exclusively earmarked for .creating warehousing facilities. The Finance Minister proposed an increase in allocation by 21.7 per cent for Right to Education – Sarva Shiksha Abhiyan to Rs 25,555 crore and by 29 per cent for Rashtriya Madhyamik Shiksha Abhiyan to Rs 3,124 crore. He proposed to set up a Credit Guarantee Fund to ensure better flow of funds to students. Regarding health sector he proposed an increase in allocation for NRHM to Rs 20,822 crore in 2012-13. He also said that National Urban Health Mission is being launched. The Finance Minister said that Mahatma Gandhi National Rural Employment Guarantee Scheme has had a positive impact. He proposed an allocation of Rs 3915 crore for National Rural Livelihood Mission (NRLM) which represents an increase of 34 per cent. He proposed to provide Rs 200 crore to enlarge the corpus to Rs 300 crore of the Women's SHG's Development Fund. He said the fund will also support the objectives of Aajeevika i.e. NRLM and will empower women SHGs to access bank credit. He also proposed to establish a Bharat Livelihoods Foundation of India through Aajeevika which will support and scale up civil society initiatives and interventions particularly in the tribal regions covering around 170 districts. Allocation under National Social Assistance Programme (NSAP) is proposed to be raised by 37 per cent to Rs 8447 crore. Under the Indira Gandhi National Widow Pension Scheme and Indira Gandhi National Disability Pension Scheme for BPL beneficiaries, the monthly pension amount per person is being raised from Rs 200 to Rs 300. FM announced a provision of Rs 1,93,407crore for Defence Services including Rs 79,579 crore for capital expenditure. He said the allocation is based on present needs and any further requirement would be met. Addressing governance related issues, Mukherjee said adequate funds are proposed to be allocated to complete enrollments of another 40 crore persons under UID Mission. Outlining the steps taken by the Government to address the issue of black money, the Minister proposed to lay a White Paper on Black Money in the current session of Parliament. In the Budget estimates for 2012-13, the Gross Tax Receipts are estimated at Rs 10, 77,612 crore which is an increase of 15.6 per cent over the Budget Estimates and 19.5 per cent over the revised estimates for 2011-12. After devolution to States, the net tax to the Centre in 2012-13 is estimated at Rs 7,71,071crore. The Non Tax Revenue Receipts are estimated at Rs 1,64,614crore and Non-debt Capital Receipts at Rs 41,650 crore. The total expenditure for 2012-13 is budgeted at Rs 14,90,925 crore. Of this Rs 5,21,025crore is the Plan Expenditure while Rs 9,69,900 crore is budgeted as Non Plan Expenditure. The tax proposals are guided by the need to move towards the Direct Tax Code(DTC) in the case of direct taxes and Goods & Services Tax (GST) in the case of indirect taxes. Individual income up to Rs 2 lakh will be free from income tax; income upto Rs 1.8 lakh was exempt in 2011-12. Income above Rs 5 lakh and upto Rs 10 lakh now carries tax at the rate of 20 per cent; the 20% tax slab was from Rs 5 lakh to Rs 8 lakh in 2011-12. A deduction of up to Rs 10,000 is now available for interest from savings bank accounts. Within the existing limit for deduction allowed for health insurance, a deduction of up to Rs 5000 is being allowed for preventive health check-up. Senior citizens not having income from business will now not need to pay advance tax. While no changes have been made in corporate taxes, the budget proposes a number of measures to promote investment in specific sectors. In order to provide low cost funds to some stressed infrastructure sectors, withholding tax on interest payments on external borrowings (ECBs) is being reduced from 20 percent to 5 per cent for 3 years. These sectors are – power, airlines, roads and bridges, ports and shipyards, affordable housing, fertilizer, and dam. Investment linked deduction of capital expenditure in some businesses is proposed to be provided at 150 per cent as against the current rate of 100 per cent. These sectors include cold chain facility, warehouses for storing foodgrain, hospitals, fertilizers and affordable housing. Bee keeping, container freight and warehousing for storage of sugar will now also be eligible for investment linked deduction. The budget also proposes weighted deduction for R&D expenditure, agri-extension services and expenditure on skill development in the manufacturing sector. For small and medium enterprises (SMEs) the turnover limit for compulsory tax audit of accounts as well as for presumptive taxation is proposed to be raised from Rs 60 lakh to Rs 1 crore. In order to augment funds for SMEs, sale of residential property will be exempt from capital gains tax, if the proceeds are used for purchase of plant and machinery, etc. A General Anti-Avoidance Rule (GAAR) is being introduced in order to counter aggressive tax avoidance. Securities transaction tax (STT) is being reduced by 20 per cent on cash delivery transactions, from 0.125% to 0.1%. Alternative Minimum Tax is proposed to be levied from all persons, other than companies, claiming profit linked deductions. The Finance Minister has proposed a series of measures to deter the generation and use of unaccounted money. In the case of assets held abroad, compulsory reporting is being introduced and assessment up to 16 years will now be allowed to be re-opened. Tax will be collected at source on trading in coal, lignite and iron ore; purchase of bullion or jewellery above Rs 2 lakh in cash; and transfer of immovable property (other than agricultural land) above a specified threshold. Unexplained money, credits, investments, expenditures etc. will be taxed at the highest rate of 30 per cent irrespective of the slab of income. The Finance Minister has made an effort to widen the service tax base, strengthen its enforcement and bring it as close as possible to the central excise. A common simplified registration form and a common return are being introduced for central excise and service tax. All services will now attract service tax, except those in the negative list. The negative list has 17 heads and includes specified services provided by the government or local authorities, and services in the fields of education, renting of residential dwellings, entertainment and amusement,public transportation, agriculture and animal husbandry. A number of other services including health care, and services provided by charities, independent journalist, sport persons, performing artists in folk and classical arts, etc are exempt from service tax. Film industry also gets tax exemption on copyrights relating to recording of cinematographic films. Service tax rate is being increased from 10 per cent to 12 per cent, with consequential change in rates for services that have individual tax rates. The standard rate of excise duty for non-petroleum goods is also being raised from 10 per cent to 12 per cent. No change is proposed in peak rate of customs duty of 10 per cent on non-agricultural goods. The Budget offers relief to different sectors of economy, especially those under stress. Import of equipment for fertilizer projects are being fully exempted from basic customs duty of 5 per cent for 3 years Basic customs duty is also being lowered for a number of equipment used in agriculture and related areas. In the realm of infrastructure, customs relief is being given to power, coal and railways sectors while steam coal gets full customs duty exemption for 2 years (with the concessional counter-veiling duty of 1 per cent), natural gas, LNG and certain uranium fuel get full duty exemption this year. Different levels of duty concessions are being provided to help mining, railways, roads, civil aviation, manufacturing, health and nutrition and environment. So as to help modernization of the textile industry, a number of equipment are being fully exempted from basic customs duty, and lower customs duty is being proposed for some other items used by the textile industry. Customs duty is being raised for gold bars and coins of certain categories, platinum and gold ore. Customs duty is to be imposed on coloured gem stones. Excise duty on certain categories of cigarettes and bidis, pan masala and chewing tobacco is being increased. Customs duty is being increased on completely built large cars/ SUVs/ MUVs of value exceeding $40,000. Silver jewellery will now be fully exempt from excise duty. Unbranded precious metal jewellery will attract excise duty on the lines of branded jewellery. Operations are being simplified and measures taken to minimize impact of this provision on small artisans and goldsmiths. While direct tax proposals in the Budget will result in a net revenue loss of Rs 4,500crore, indirect taxes will result in a net revenue gain of Rs 45,940 crore. Thus, the tax proposals will lead to a net gain of Rs 41,440crore. (With PIB inputs)

"Indian Financial World"G-secs decline while call rate eases

The government securities (G-Sec) declined on fresh selling pressure from banks and corporates while call rates eased at the overnight money market here today due to lack of demand from borrowing banks. The 8.79 per cent (G-Sec) maturing in 2021 moved down further to Rs 103.05 from Rs 103.2250 yesterday, while its yield edged up to 8.32 per cent from 8.30 per cent.

The 9.15 per cent (G-Sec) maturing in 2024 dropped to Rs 106.17 from Rs 106.24, while its yield inched up to 8.35 per cent from 8.34 per cent. The 8.19 per cent (G-Sec) maturing in 2020 fell to Rs 99.04 from Rs 99.17, while its yield looked up to 8.36 per cent from 8.33 per cent. The 7.83 per cent (G-Sec) maturing in 2018, the 8.13 per cent (G-Sec) maturing in 2022 and the 8.28 per cent (G-Sec) maturing in 2027 were also quoted lower at Rs 97.35, Rs 98.10 and Rs 97.81, respectively. The overnight call money rate finished slightly lower at 8.80 per cent from yesterday's close of 8.85 per cent. It moved in a range of 8.90 per cent and 8.70 per cent. The Reserve Bank of India (RBI) under the Liquidity Adjustment Facility (LAF) purchased securities worth Rs 1,23,090 crore from 50 bids at the one-day repo auction at a fixed rate of 8.50 per cent.

"Finance world of India" No rate hike, RBI eyes inflation for cues

With inflation remaining high, the Reserve Bank of India today kept the interest rate unchanged for now, but made a promise that cost of borrowing will come down in future. Amidst expectations of a pause in tight monetary policy, RBI Governor D Subbarao gave a firm signal that no further hardening of interest rates is required.

However, the timing and the quantum of rate cuts will be determined by inflation, he said unveiling the mid-quarterly review of the credit policy, a day before the Union Budget. The benchmark policy interest rate (repo rate) at which RBI lends to banks has been kept unchanged at 8.5 per cent. The cash reserve ratio, the portion of deposits banks need to keep with RBI, has been retained at 4.75 per cent. But this rate was reduced only on March 10 by 0.75 percentage points to infuse Rs 48,000 crore in the system to ease liquidity.

Indian Economic Survey pegs growth at 7.6% next fiscal

The Economic Survey for 2011-12 tabled by finance minister Pranab Mukherjee in Parliament on Thursday projected a 7.6% growth for the next fiscal beginning April 1. Inflation, on the other hand, is projected at 6.5-7% by the end of March. "It may further moderate during 2012-13 due to tightening of monetary policy and other measures put in place by the government," the survey said. The growth in the country's gross domestic product (GDP) during the current fiscal has been pegged at 6.9%. The country's GDP growth had decelerated to 6.1% in third quarter from 6.9% in the second quarter of the curent fiscal. "But despite the low growth figure of 6.9%, India remains one of the fastest growing economies of the world as all major countries including the fast growing emerging economies are seeing a significant slowdown." According to the survey, industrial production is likely to improve in the next financial year.

"US Special" US insider trading probe involves 120 people: report

NEW YORK: US authorities are actively building cases against 120 people accused of insider trading in an expanding and possibly unprecedented criminal probe, the Wall Street Journal reported Tuesday. The Journal said the investigation comes after a series of successful prosecutions of insider trading, with 66 people charged since late 2009 and 57 of them convicted or pleading guilty. "We've identified them, and now of course we have to build a case around that," the Journal quoted David Chaves, a senior Federal Bureau of Investigation agent, as saying on the sidelines of a press conference. It cited Chaves as saying that roughly 240 people, including hedge fund traders and company insiders, were being investigated for possible improper insider trading. Half of those are "targets," meaning the government believes they have broken the law and is building cases against them, Chaves told. The FBI launched a new campaign starring Michael Douglas - who played the villainous trader Gordon Gekko in the classic film "Wall Street" - to encourage the public to provide information about insider trading. The ads feature the young Michael Douglas voicing the movie's trademark line "Greed... is good" followed by an older Douglas saying: "The movie was fiction but the problem is real."

German cabinet minister calls for Greek euro exit

Germany’s interior minister called for Greece to leave the eurozone as hopes that the world’s richest countries would stump up more cash to help the International Monetary Fund (IMF) fight Europe’s debt crisis faded.

Becoming the first member of Germany’s cabinet to openly call for a Greek exit, Hans-Peter Friedrich told that Greece’s chances of restoring its financial health would be greater outside the euro. “I’m not saying that Greece should be thrown out but rather to create incentives that it can’t say ‘no’ to,” he added. His comments came as eurozone leaders faced calls to increase their own efforts before any more money is made available from the IMF. Fresh from agreeing a second €130bn (£110bn) bail-out for Greece, there were hopes that this weekend’s gathering of G20 finance ministers in Mexico City would achieve a deal on how to ramp up the IMF’s own European war chest by as much as $600bn (£378bn). UK Treasury officials made it clear that any new deal with the IMF was now likely to be delayed until meetings in April. Eurozone leaders have been negotiating with the US, China and Japan to contribute more to the IMF to build a “financial firewall” that would shield the likes of the Spanish and Italian economies from any intensification of the region’s crisis this year. Despite fears in Washington, Tokyo and Beijing that Europe still poses a real threat to the wider global economic recovery, they want to see Europe take further steps first. America’s opposition is fiercest, with the White House making clear it won’t contribute more to the IMF. “What we don’t want to see is the IMF substitute – and it really cannot substitute – for a stronger European response,” US Treasury Secretary Tim Geithner said. Germany also raised doubts that finance ministers would come up with a deal on IMF funding this weekend. “I expect no decision at the G20 summit on boosting the IMF’s resources,” said Jens Weidmann, head of Germany’s central bank. Other major contributors to the IMF are insisting that Europe must combine its two existing bail-out funds as a pre-condition of any extra money from the IMF. The European Financial Stability Facility, which is worth about €250bn, will be joined this summer by the €500bn European Stability Mechanism. “We have to take a hard look at the firewall,” said Angel Gurria, head of the Organisation for Economic Co-operation and Development. “The bigger, the thicker, the deeper and the taller it is, the more credible it will be and the less likely it will have to be used.” European leaders will discuss whether to weld the funds together at a summit in Brussels this week. But, Germany has so far refused to say whether it would support such a move. Mr Weidmann hit back at criticism that Europe’s largest economy was not doing enough to solve the Continent’s crisis. Germany bore a “disproportionately large share” of the financing of the two bail-out funds, he said, adding that there was a misconception the country had managed to “dodge the flames of the current crisis”.

"Finance World Special" BRICS to look at bid for top World Bank job

The world's major emerging economies rejected the tradition that an American automatically is selected to head the World Bank and they will look at putting forward their own candidate for the open job.

Finance chiefs from the BRICS group of emerging market powerhouses - Brazil, Russia, India, China and South Africa - met on the sidelines of a G20 meeting in Mexico City and agreed the top World Bank job should be open to all countries. "Candidates should be based on merit and not on nationality," Brazilian Finance Minister Guido Mantega told reporters. Another BRICS official said the group will discuss the possibility of putting up their own candidate to challenge whoever the U.S. government nominates. "Certainly it is a discussion we will have." Countries have until March 23 to submit names for the top post and a decision is likely by April meetings of the World Bank and International Monetary Fund. Americans have held the top job since the World Bank was set up at the end of the Second World War but the unwritten rule has in recent years faced more resistance, along with the tradition that a European heads the International Monetary Fund, as emerging economies gain more economic clout. "It is time we break the traditions of the U.S. and Europe sharing the two seats and amongst all of us we must try harder this time to find some consensus," said Pravin Gordhan, South Africa's finance minister. Robert Zoellick, the current World Bank president, plans to step down at the end of June after deciding against seeking a second five-year term. The United States has said it will nominate a replacement candidate but has not yet said who it will be. Possible candidates are thought to include former U.S. treasury secretary Lawrence Summers, current Secretary of State Hillary Clinton, and Susan Rice, the U.S. ambassador to the United Nations. The State Department has said Clinton would not be taking the job. The World Bank is the leading provider of development aid to poorer countries and its president is one of the world's top policymakers. "They can put forward their candidate," Gordhan said, referring to the United States. "But rather than it becoming a destructive exercise, it should be a constructive process so that we attempt to build consensus on who the candidate should be. It is idealistic but let's give it a shot."